Trussler v. R., 99 DTC 5439, [1999] 3 CTC 580 (FCA)

Rothstein J.A.:

The issue in this appeal from a decision of The Honourable John J. Urie, acting as a Deputy Judge of the Tax Court of Canada, is the validity of a regulation made under the Income Tax Act, R.S.C. 1985 (5th Supp.), c.1, limiting the amount which judges may deduct from their income for income tax purposes in respect of registered retirement savings plan (“RRSP”) contributions [1] . Urie D.J. wrote comprehensive reasons upholding the validity of the regulation. The Chief Justice is in substantial agreement with the reasons of Urie, D.J. and would be prepared to dismiss the appeal on that basis alone. My brother, Décary J.A. and I also agree with the reasons of Urie D.J. and add only a few comments to address the arguments made before this Court on appeal.

Prior to 1992, judges were entitled to deduct from their income, contributions towards their annuity under the Judges Act, R.S.C. 1985, c. J-1. They were also entitled to deduct contributions to a RRSP up to $12,500. For 1992 and subsequent years, regulation 8309(2) enacted by P.C. 1991- 2540, dated December 23, 1991, limited the maximum deductible contribution by a judge to a RRSP to $1,000. It is this regulation that reduces the maximum contribution limit to a RRSP by a judge that is challenged by the Appellant.

The first basis for the challenge is section 100 of the Constitution Act, 1867, (U.K.) 30 & 31 Victoria, c. 3. Section 100 provides:

The Salaries, Allowances, and Pensions of the Judges of the Superior, District, and County Courts (except the Courts of Probate in Nova Scotia and New Brunswick), and of the Admiralty Courts in Cases where the Judges thereof are for the Time being paid by Salary, shall be fixed and provided by the Parliament of Canada.

The Appellant argues that the reduction in the maximum RRSP contribution limit from $12,500 to $1,000 for judges constitutes a reduction in the salaries, allowances and pensions of judges which must be fixed and provided by the Parliament of Canada and not by the Governor-in-Council by regulation. We cannot agree that the opportunity to deduct RRSP contributions from income for income tax purposes constitutes the fixing and providing of judges’ salaries, allowances or pensions. The words “fixed and provided” indicate that what is contemplated is positive remuneration or allowances to judges and not a variable income tax deferral arising from discretionary individual contributions by judges to a voluntary RRSP. Such tax deferral is not contemplated by the words of section 100.

At the root of section 100 is the principle of judicial independence about which much has been written and need not be repeated here. Suffice it to say that any attempt by regulation to alter the salaries, allowances or pensions of judges would be held to be ultra vires section 100 of the Constitution Act. In À. v. Beauregard, [1986] 2 S.C.R. 56 (S.C.C.), Dickson C.J.C. stated at page 77:

1 want to qualify what I have just said. The power of Parliament to fix the salaries and pensions of superior court judges is not unlimited. If there were any hint that a federal law dealing with these matters was enacted for an improper or colourable purpose, or if there was discriminatory treatment of judges vis-d-vis other citizens, then serious issues relating to judicial independence and the law might well be held to be ultra vires s. 100 of the Constitution Act, 1867.

Regulation 3809(2) is not an attempt to alter salaries, allowances or pensions of judges. Nor was there any improper or colourable purpose alleged here. Indeed, the purpose was to bring the RRSP treatment of judges into line with the treatment accorded most, if not all, other taxpayers who earned salaries similar to those of judges. Regulation 8309(2) is not contrary to section 100 of the Constitution Act, 1867 and is not ultra vires for that reason.

The Appellant then argues that regulation 8309(2) is ultra vires because the authorizing statutory provision is too indefinite. Paragraph 221(1) (a) of the Income Tax Act provides:

The Governor in Council may make regulations

(a) prescribing anything that, by this Act, is to be prescribed or is to be determined or regulated by regulation;^ [2]

The definition of “RRSP deduction limit” in subsection 146(1) of the Income Tax Act provides:

“RRSP deduction limit” of a taxpayer for a taxation year means the amount determined by the formula

A + B - C

where

A is the taxpayer’s unused RRSP deduction room at the end of the immediately preceding taxation year,

B is the amount, if any, by which the lesser of the RRSP dollar limit for the year and 18% of the taxpayer’s earned income for the immediately preceding taxation year exceeds the total of all amounts each of which is the taxpayer’s pension adjustment for the immediately preceding taxation year in respect of an employer, or a prescribed amount in respect of the taxpayer for the year, and

C is the taxpayer’s net past service pension adjustment for the year.

The regulation-making power is contained in the concluding words of B:

or a prescribed amount in respect of the taxpayer for the year, and.

It is clear that paragraph 221 (1 )(a) authorizes the Governor-in-Council to prescribe anything that is to be prescribed by the Income Tax Act and that a component of the calculation of the RRSP deduction limit may be “a prescribed amount”. Accordingly, the Governor-in-Council has the authority to prescribe that component by regulation.

The question then is whether the words “a prescribed amount in respect of the taxpayer for the year” in the definition of the “RRSP deduction limit” in subsection 146(1) of the Income Tax Act are, as the Appellant submits, too imprecise to authorize regulation 8309(2). The Appellant’s argument is that there is no limit on what may be prescribed or who may be affected by what is prescribed.

No authorities were cited with respect to the Income Tax Act or regulations made under it as to the standard of precision required. In any event, the words at issue here must be read in context. They authorize the Gover- nor-in-Council to prescribe an amount that reduces the maximum RRSP deduction limit. They immediately follow a reference to a “taxpayer’s pension adjustment” which is also an amount that may be deducted from the RRSP deduction limit. We do not think it is necessary to go further. To suggest that the regulation making authority is without limit and therefore ineffective in authorizing a regulation such as 8309(2) is to read it out of context. What may be prescribed is only an amount that reduces the maximum RRSP deduction limit. It must be relevant to RRSP contributions and to matters such as pension adjustments. Other Canadians do not have the opportunity to make contributions to a pension plan and also to an RRSP up to the maximum limit. As indicated, regulation 8309(2) was intended to bring the treatment of judges in line with that of other Canadians. Therefore, we are unable to accept the Appellant’s contention that the regulation is ultra vires on this ground.

The Appellant’s third argument is a variation of the second argument; that regulation 8309(2) imposes a tax and that the language in the definition of “RRSP deduction limit” is not sufficiently clear to delegate the power to impose a tax on the Governor-in-Council. Without deciding whether the regulation imposes a tax, for the reasons that we have already given, we are of the opinion that the words of the statute are adequate to support the regulation.

The Appellant’s final argument is that the regulation is void for ambiguity. The appellant says it may be read in two ways: one - to replace the entire B portion of the definition of “RRSP deduction limit”; and two - only to reflect the “prescribed amount”. On this ground there is nothing to add to the reasons of Urie D.J., that the regulation can only reflect the “prescribed amount” as that is the only regulation making authority granted by Parliament under the definition of “RRSP deduction limit”. There is no ambiguity and the regulation is not void on this ground.

The appeal will be dismissed. In accordance with the agreement of counsel, there will be no award of costs.

Appeal dismissed.